Special thanks to guest contributors: Jeff Martino and Katelyn Sprague.

Baker McKenzie’s Labor and Employment, Trade Secrets and Antitrust lawyers explore the impact on employers of the severe limitations on post-employment noncompete restrictions outlined in President Biden’s Executive Order on Promoting Competition in the American Economy and the supporting Fact Sheet.

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Special thanks to Jeffrey Martino and Bradford Newman for their contributions to this post.

On July 9, 2021, President Biden issued his Executive Order on Promoting Competition in the American Economy (EO) (Fact Sheet here) signaling support for severe limitation of post-employment noncompete restrictions–a move likely to add fuel to the fire of states passing laws to limit the use of post-employment noncompetes. The EO Fact Sheet states that the banning or limiting of noncompetes will “[m]ake it easier” for employees to “change jobs[.]” Though employers may balk, given Biden’s campaign promises and support for passage of the Protecting the Right to Organize (PRO) Act (see our prior blog here), employers should not be surprised.

The EO encourages the Chair of the Federal Trade Commission (FTC) to exercise the FTC’s statutory rulemaking authority to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” It is uncertain whether that rulemaking will entirely ban or just limit noncompete agreements; focus on restricting noncompetes for all workers or just those considered more vulnerable (such as low wage earners); restrict nonsolicit agreements along with noncompetes; or preempt state law.

The EO also encourages the Attorney General and the Chair of the FTC to consider revising the October 2016 Antitrust Guidance for Human Resource Professionals “to better protect workers from wage collusion” by (as the Fact Sheet explains) strengthening antitrust guidance to prevent the suppression of wages or reduction of benefits through employer collaboration and sharing of wage and benefit information. As we explained in a recent client alert, a push to scrutinize competition issues in labor markets was already in play, tracing back to the 2016 Antitrust Guidance, in which the Department of Justice and FTC alerted companies that “naked” wage-fixing and no-poaching agreements could be prosecuted criminally, and that employers competing to hire or retain the same employees are “competitors” from an antitrust perspective.


Continue Reading Goodbye to Employer Protections? Biden Issues Executive Order Encouraging Curtailing of Post-employment Noncompetes

In part one of this article, we discussed when and how multinational companies can use a noncompetition agreement on their highly skilled employees to protect their confidential information and other intellectual property. In particular, we described five key factors to consider before rolling out noncompete covenants around the world.

In part two, we analyze how

As multinational companies compete for highly skilled employees around the world, they are often confronted with a deceptively simple question: Do they impose a noncompetition agreement on their employees?

This article is part one of a two-part article addressing how multinational companies can use a noncompetition agreement on their highly skilled employees to protect their

Going into 2020, employers should be mindful of several new state laws aimed at limiting the enforceability of noncompete agreements against low-wage employees. Crucially, while protecting low-wage worker job mobility is the key aspect of these new state laws, each has its own unique nuances and one-off requirements, further complicating employer efforts to protect their

California courts mostly take a no prisoners approach to Business and Professions Code section 16600, the statute prohibiting illegal restraints on trade. Courts broadly interpret Section 16600, which states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void,” to invalidate most post-employment non-competes and customer non-solicits, including covenants preventing former employees or their new employers from “hiring” employees of a former employer (so-called “no hire agreements”). But Section 16600 does not bar all post-employment covenants–just those that “restrain” trade.


Continue Reading Familiarity Breeds Contempt—And [Litigation Over Employee Non-Solicits]

As employment lawyers based in California are well aware that post-employment non-compete agreements are generally void as a matter of law in this state. Further, there is precedent for awarding punitive damages and disgorgement of profits where employers have knowingly required employees to enter into invalid agreements. Also, the DOL has actively pursued California-based companies engaging in anti-competitive practices when it comes to talent.

Against that backdrop, however, employers need not “throw in the towel” completely when it comes to post-termination restrictive covenants as there are a few narrow scenarios that allow for enforceable post-termination non-competes in California in the right circumstances, and a potential new take on an old strategy to consider.


Continue Reading Can Employers Use The California Labor Code To Protect Company Assets?

Craig Lee and Will Woods from Baker McKenzie’s Antitrust & Competition team shared the following update regarding no-poach agreements:

In July 2018, State Attorneys General from 11 states formed a coalition to investigate no-poach agreements in franchise contracts that restrict the ability to recruit or hire employees from the franchisor or another franchisee of the same chain. As part of the investigation, the coalition requested information about no-poach policies and practices from several fast food franchises.


Continue Reading Risks Of Employee No-Poach Agreements

In mid-December, we hosted our Annual California Update in Millbrae, CA. We were so pleased to see many of you in attendance.

Our End-of-Year Newsletter will hit inboxes shortly, but until then – here’s our top 10 New Year’s resolutions for multinationals in 2018:


Continue Reading Top 10 New Year’s Resolutions For California-Based Multinational Employers